RBA tipped to stand still on cash rate

According to a survey by comparison website finder.com.au, all 34 participants – economists and commentators – expect rates will remain at the record low 2.00 per cent.

This marks the first time in six months the panel of experts has reached unanimous agreement on the cash rate forecasts.

Most respondents cited a need to “wait and see” what impact the two rate cuts in February and May will have on the economy as the reason for the RBA holding the cash rate at today’s meeting.

“Given that the Reserve Bank of Australia cut the cash rate again in May, we believe they will take a wait-and-see approach to rates for the next few months, at least until they see what impact the latest rate cut has on the economy,” Mortgage Choice spokesperson Jessica Darnbrough said.

Melbourne Business School’s associate professor of economics, Mark Crosby, said the case for another cut is not strong enough at this point.

“The Reserve Bank has been aggressive in cutting rates in recent months, but they are now running up against too hot a housing market and it is time to consider raising rates as the Fed moves to raise in Q4 or Q1 2016,” Mr Crosby said.

One in three experts are expecting another cash rate cut this year, while the remainder expect no further cash rate moves in 2015.

According to the survey, 23 out of the 34 respondents expect the cash rate to start rising in 2016, while eight are forecasting the cash rate will rise beyond 2016.